Editor's Comment

Zambia should diversify like yesterday

CHIKWANDA

MINISTER of Finance Alexander Chikwanda’s advice on diversifying the country’s economy calls for collective brainstorming, and more importantly speedy implementation of progressive ideas.
Mr Chikwanda, speaking at the just-ended Zambia Finance and Investment Conference organised by the Ministry of Finance, called for the diversification of the economy, which is mainly driven by copper.
Issues of diversification have been tabled at various forums without much success, but now more than ever before, the matter calls for urgency.
Zambia needs to diversify to discover other means of creating wealth.
Zambia is in dire need of alternative sources of wealth to generate more income and help central Government raise more revenue to develop the country.
There is also need to have more receipts from exports.
The 2014 third Zambia Economic Brief states that Zambia’s strong growth is set to continue. The brief however notes that risks are also growing due to declining copper prices and the likely increase in borrowing costs in the medium term.
Zambia’s non-copper merchandise exports have grown briskly alongside copper exports in the past decade.
The brief states that reducing trade costs, particularly the costs of crossing borders, will help exports grow further, thereby generating more productive jobs.
Diversification of the economy also creates employment.
Some developed countries transformed their economies by diversifying.
Oil-rich nations like Kuwait, the United Arab Emirates, including Russia are also diversifying their economies by nurturing their manufacturing and tourism industries to complement the exports of their commodities as alternatives for foreign exchange earnings.
While competitive economies have seen the need to diversify, Zambia has unfortunately continued depending on the export of mineral resources as a major income earner.
That is why Mr Chikwanda is right when he says Zambia needs to learn a lesson from excessive dependence on exporting few commodities.
He further says the country should insulate itself from external shocks.
Zambia’s economy suffers each time there is an external shock to the copper industry. This was evidenced from early to mid-1970s, late 1990s to early 2000 and 2008-2009.
Mr Chikwanda said while the economic vibrations in China have affected many countries globally, commodity countries such as Zambia and Brazil have been the most hit hence the need to diversify the economy.
Indeed the fall in commodity prices on the international market has effected Zambia’s balance of payment and this has resulted in the fall in foreign exchange reserves.
It is the failure to insulate the country from external shocks that has contributed to the country’s poor economic performance. This has ultimately led to underdevelopment of other sectors of the economy such as agriculture, manufacturing and tourism.
Therefore, there is need to diversify our economy and it should be done speedily.
The speed includes Government offering more incentives in the agriculture, tourism and manufacturing sectors.
Borrowing should also be attractive.
Zambia generally knows what should be done to diversify.
With infrastructure such as roads opening up more parts of the country and local and international markets readily available, it is time to put word into deed.

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